On the verge of a new food crisis

With the price of wheat on international commodity markets increasing on a daily basis it is likely that right now we are observing the early stages of a new food crisis. Even if the situation will not be as dramatic as the recent crisis of 2007-2008 – when the prices of many agricultural goods (rice, wheat, corn ) reached the highest levels ever, triggering violence in several regions such as Bangladesh and Haiti which is still a strong indicator of threats to the global food market.

While we may have learned a few lessons from the food crisis of 2008, little has been done to prevent future crises, as Mr. Joachim von Braun (head of the Research and Development Center of Bonn University) noted in an article in the “Financial Times”.

Shaping the price of food in markets is a three dimensional factor: expectations for future supply and demand, the role of speculators in commodity markets and the importance of good values for the political stability in countries such as Egypt. Today, countries with low income are more vulnerable than ever, even more than the recent food crisis of 2008.

The previous food crisis was triggered partly to the fact that the agricultural sector in developing countries had long been neglected, while in developed countries the subsidy policy was active. However, the adverse weather conditions triggered the food crisis, which was escalated from the mishandling of the exports embargo and the creation of supply stocks of importing countries as well as lack of regulatory framework for commodities trade.

“The food crisis is not affecting so much the rich countries. But for the poor it raises issues regarding basic nutrition and long-term health effects. The number of undernourished has increased due to the economic downturn. And the poor no longer accept stoically the extreme prices of basic foodstuffs, as shown in the 2008 crisis”, Mr. von Braun stated. Better regulation of markets, in order to avoid intense actions, should be accompanied by an increase of investments in agriculture. Spending on research and development for the agricultural sector are the most efficient investment to promote growth and reduce poverty.